Adopting Innovation in Regional Value Chains as a Prerequisite for Building Resilience in Global Value Chains: A Case Study from the Clothing Industry in the Western Balkan Region

Authors

  • Jolta Kacani Rruga Elbasanit, Pallati Gener 2, Ap. 11, Tirana 1001, Albania
  • Ingrid Shuli Rruga Elbasanit, Pallati Gener 2, Ap. 11, Tirana 1001, Albania
  • Jetona Myteveli Rruga Elbasanit, Pallati Gener 2, Ap. 11, Tirana 1001, Albania

DOI:

https://doi.org/10.31437/2415-5489.2022.08.01

Keywords:

Global value chains, clothing industry, innovation, regional value chains, Western Balkans

Abstract

The Covid-19 pandemic has significantly impacted operations in the global value chains of the clothing industry. During the pandemic these international networks experienced geographic changes in the supply and a reconfiguration in production sourcing arrangements. These occurrences have changed the competitiveness in the clothing industry as the business model is no longer dependent on low wages and the unskilled labor force. Digitalization and automation in clothing manufacturing are expected to restructure geographical landscape in the division of labor in the clothing industry. The application of digital technologies is expected to boost resilience, to enhance transparency and to foster sustainability. Within the new circumstances in the global value chain of the clothing industry, we examine the importance innovation and the creation of regional value chains has for developing countries to ensure a higher level of integration. With regard to developing countries our case study are countries located in the Western Balkan region aspiring to become active member of the European Union value chain. Based on OLS estimators and international data sets we conclude that innovation in regional value chains promotes knowledge spillovers among participating countries and enhances the absorptive capacity of the labor force. The results of our model indicate that exports and innovation significantly influence integration starting with areas like the clothing industry in which a number of developing countries already have established links with various GVCs.

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Published

2022-05-20

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